Self-sufficiency, economic freedom must for sovereignty: Concrete steps to be taken to shore up economy, says NSC

ISLAMABAD: The 40th meeting of the National Security Committee (NSC) that concluded here on Monday reiterated its resolve to show zero tolerance for terrorism in Pakistan and reaffirmed its determination to take on all entities that resort to violence.

Chaired by Prime Minister Muhammad Shehbaz Sharif, the committee maintained that Pakistan’s security was uncompromisable and the full writ of the state will be maintained on every inch of the Pakistan’s territory.

“This will be dealt with full force of the state,” a statement issued by the Prime Minister House regarding the NSC decisions said. Federal Cabinet members, Chairman Joint Chiefs of Staff Committee Gen Shahid Shamshad Mirza, all services chiefs, and heads of intelligence services attended the meeting.

The prime minister emphasised that the war against terrorism would be led by federal and provincial governments as per the National Action Plan (NAP) in accordance with the National Internal Security Policy with people-centric socio-economic development as priority, while the armed forces will provide resolute deterrence and a secure, conducive and enabling environment.

The forum undertook a comprehensive view of the ongoing economic situation vis-à-vis challenges being faced by the common people of Pakistan, particularly the lower and middle-income classes.

Finance Minister Ishaq Dar briefed the forum about the economic stability road map of the government including the status of discussions with international financial institutions, exploring other financial avenues based on mutual interests as well as relief measures for the common people.

In order to strengthen the economy, the committee agreed on undertaking concrete steps including imports rationalization as well as preventing illegal currency outflows and hawala business.

Emphasis will be especially made to improve agricultural output and manufacturing sector to ensure food security, imports substitution and employment. It was resolved that people-centric economic policies with trickle-down effects to common people will remain priority.

It was also agreed to involve all stakeholders for consensus to realise effective and fast track economic recovery and road map. Taking into account the efforts for mitigating the challenges of 33 million flood victims, the forum resolved to mobilise all resources for their rehabilitation and reconstruction in coordination with the provincial governments and multilateral financial institutions.

The forum also appreciated the ongoing relief efforts led by the prime minister and federating units. The committee was also apprised of the security situation of the country with particular focus on recent terrorist incidents in Khyber Pakhtunkhwa and Balochistan.

Meanwhile, top official sources confirmed to The News that during the NSC meeting, it was decided to slap Flood Levy in the range of 1 to 3 percent through the promulgation of a presidential ordinance and firm up a proposal for unveiling the mini-budget.

The proposal is expected to be finalized within the ongoing week. The committee approved rationalization of imports and now the government is all set to slap Flood Levy in the range of 1 to 3 percent to curtail imports and fetch Rs60 billion into second half (Jan-June) period of the current fiscal year.

Minister for Finance and Revenue Ishaq Dar is likely to grant assent to the mini-budget proposals within next two to three days after which a presidential ordinance will be promulgated. “An important meeting is expected to be held on Tuesday (today) for finalizing proposals related to the upcoming mini-budget” said one top official on the condition of anonymity.

So far, no other proposals could be finalized yet mainly because the government is in catch-22 situation, as it is quite hard for the policy-makers to impose additional taxes at a time when the country is facing stagflation. The CPI-based inflation stood at over 25 percent, while the real GDP growth was projected to come down from 5 percent to less than 2 percent for the current fiscal year.

The FBR faced a shortfall of Rs225 billion for achieving the desired target for December 2022, as the tax collection stood at Rs740 billion against the fixed target of Rs965 billion. The FBR envisaged annual tax collection target of Rs7,470 billion but in the wake of Rs225 billion it would be hard to go close to the desired annual tax collection target.

The federal government prefers to impose Flood Levy mainly because it will not become part of the Federal Divisible Pool (FDP) under the National Finance Commission (NFC) Award. So, the additional revenues collected through the Flood Levy would not be distributed among the provinces if the government moved ahead on this front.

The government functionaries argued that they had asked the FBR to gear up efforts to materialize the desired tax collection target at all costs. The FBR high-ups said that tax cases worth Rs250 billion were pending with the higher judiciary and they had informed the IMF that they would be able to collect the due taxes till March 2023.

They said the IMF had been requested to stagger tax collection without revising downward the annual tax collection target of Rs7,470 billion till June 30, 2023. The FBR has also been assigned to identify those sectors that earned lofty profits in the last fiscal year and two such areas were the banking and beverages sectors.

It is yet to see how the government decides to take action to fetch additional tax and non-tax revenue collection in the remaining period of the current fiscal year. The government has also been facing the gigantic task of achieving PDL to the tune of Rs855 billion and its downward revision is also on cards.

The government jacked up levy on MS petrol to Rs50 per liter and on diesel it stood at Rs32.50 per liter. The meeting also discussed that the petroleum levy would remain around Rs70-100 per litre and petrol, gas and electricity will be priced at cost and cost+ basis.

It was discussed that no subsidy would be given except to the vulnerable and most affected. It was also discussed that funds transfer to the provinces will be linked to the power and gas losses in the provinces. The meeting also highlighted the issue of current account deficit and emphasised dollar and rupee parity based on the market rate.

It was also discussed that the fiscal deficit will be met by allocating a certain percentage of GDP towards its financing. The forum also raised the point of a 10-year comprehensive plan on Pakistan’s structured support from China, the UAE, KSA, Qatar, the EU and US. The News learnt that after the implementation of these proposals, all the hurdles in the restoration of the IMF programme will be over and the loan will be revived in March.